Global Weekly Economic Update: Key Insights from Deloitte
Week of July 21, 2025
Deloitte Insights, known for its comprehensive economic research and analysis, has released its latest weekly global economic update, highlighting significant developments shaping the world economy. Led by Ira Kalish, Chief Global Economist at Deloitte Touche Tohmatsu, this edition examines the current state of U.S. inflation, monetary policy, and economic trends in China, providing actionable insights for businesses and policymakers navigating a complex economic landscape.
U.S. Inflation: Tariff Impacts Becoming Evident
Despite initial expectations, recent U.S. tariffs had a delayed inflationary impact. Prior to tariff enforcement, a surge in import volumes allowed businesses to build up inventories, enabling retailers to temporarily shield consumers from rising costs. However, new government data for June reveals a notable uptick in inflation, attributed in part to tariff-driven price increases.
The consumer price index (CPI) rose by 2.7% year-over-year in June, up from 2.4% in May, with a monthly increase of 0.3%—the highest since January 2025. When volatile food and energy costs are excluded, core CPI increased by 2.9% annually, the largest rise since February. This signals a reversal in the previously moderating inflation trajectory.
Specific price jumps were seen in goods heavily reliant on imports from China, which currently faces a 55% duty on many items. Prices of household appliances rose 2.3% month-over-month, window and floor coverings increased by 4.2%, and nonelectric cookware prices surged 4%. Such sharp elevations in durable goods prices, up 0.6% annually, suggest tariff effects are now permeating consumer markets.
The Yale Budget Lab estimates the average U.S. tariff rate at 20.6%, the highest level in over a century. If the full cost of these tariffs is passed onto consumers, inflation could rise by approximately 2.1 percentage points above baseline levels. This projection indicates overall inflation may exceed 4% in the near future, especially with additional tariffs proposed for August implementation.
Monetary Policy: Federal Reserve Under Scrutiny
The recent inflation data and tariff impacts come as U.S. monetary policy faces intense attention. Futures markets currently price in a 73% chance of the Federal Reserve cutting interest rates twice before year-end, possibly in October and December. This reflects market anticipation that inflationary pressures from tariffs might be temporary, though concerns remain about tariffs’ dampening effect on economic growth and household purchasing power.
Amid these dynamics, reports have surfaced about potential discussions within the U.S. administration regarding the replacement of Federal Reserve Chair Jerome Powell, with speculation that the new appointee may prioritize lowering interest rates. President Trump has publicly advocated for a dramatic 300 basis point cut in the Fed Funds rate. Although such aggressive cuts are unlikely under any leadership, perceptions of political interference could lead to volatile bond yields and currency movements.
Following the inflation release, the 10-year U.S. Treasury yield rose by 60 basis points, the dollar strengthened, and equity markets remained relatively stable. Subsequent news about Fed leadership discussions caused temporary market turbulence, including a drop in stock prices and currency values, though markets have partly rebounded since.
China’s Economy Shows Modest Strength
While U.S. economic indicators capture much attention, China’s latest data suggest modest economic resilience amid ongoing global uncertainties. Details on Chinese growth and trade trends indicate steady performance, offering some stability to global markets. Deloitte’s economic team continues monitoring China’s trajectory as a critical factor influencing worldwide economic conditions.
Trade Policy Developments
Trade policies remain a focal point, with evolving tariffs and negotiations shaping import costs and international commerce. The interplay between tariff-induced inflation, consumer spending, and monetary responses is central to Deloitte’s outlook on the global economy.
About Deloitte Insights’ Global Economic Research
Deloitte Insights delivers expert analysis through its Global Economics Research Center and cross-industry research groups. This weekly update is part of a broader effort providing data-driven perspectives on economics, technology, strategy, and workforce trends. Led by Ira Kalish, who brings extensive international expertise, these insights help organizations understand complex economic forces and make informed strategic decisions.
For more detailed reports and ongoing updates, businesses and leaders can access Deloitte Insights’ collection covering themes such as consumer spending, fiscal policy, labor markets, and globalization.
Contact: Ira Kalish, Chief Global Economist
Email: [email protected]
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